A prior-art arrangement carrying out the method referred to in the opening paragraph is disclosed in European patent application EP-A 0 614 312. The arrangement comprises a cascade connection of a motion-compensated noise reduction circuit and an interframe encoding circuit. By subjecting the video signal to noise reduction prior to encoding, the coding efficiency is considerably improved. The noise reduction circuit of the known arrangement includes a plurality of frame memories and a motion estimator for estimating the amount of motion between successive input frames. The encoding circuit comprises a further frame memory and a further motion compensator to obtain a motion-compensated prediction image. It is the difference between the noise-reduced image and this motion-compensated prediction image which is eventually encoded.
In the prior-art video encoding system, a certain amount of synergy between the noise reduction circuit and the encoding circuit is achieved by applying motion vectors from the noise reduction circuit to the encoding circuit so as to aid in encoding the noise-reduced image.